Departmental Revolving Funds

What is a departmental revolving fund?

A departmental revolving fund is an account that may be set up by a municipality for one of its departments. Monies received in connection with a departmental program or activity may be deposited into the revolving fund, and then money from the fund can be applied directly, without further appropriation, to support that program or activity. The departmental revolving fund must be authorized on an annual basis at a special town meeting or the annual town meeting or by the city council. The vote to establish the revolving fund must specifically identify the program or activity income that will be credited to the revolving fund, fix a preliminary limit on expenditures from the fund, and clearly specify the purposes for which monies in the fund may be expended.

Is there a limit to how much money may be appropriated to a departmental revolving fund?

The total spending that may be authorized in a fiscal year for a particular departmental revolving fund is limited to one percent of the amount of the most recently established tax levy of the municipality. The total spending that may be authorized in a fiscal year by a municipality for all departmental revolving funds cannot exceed ten percent of the most recently established tax levy of the municipality.

Are departmental revolving funds considered municipally appropriated income on the application for State Aid to Public Libraries?

Departmental revolving funds are considered municipally appropriated income since they must be approved annually at town meeting or by city council. They are reported in the State Aid to Public Libraries application as "quote revolving funds" and are considered to be part of the Total Appropriated Municipal Income (TAMI).

For information on setting up or managing a departmental revolving fund contact the Bureau of Accounts, Massachusetts Department of Revenue, at (617) 626-2300.

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